Cuba to cut 500,000 from state payroll
By Marc Frank in Havana
SOURCE: FINANCIAL TIMES
Published: September 13 2010 19:59 | Last updated: September 13 2010 19:59
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Communist Cuba will shift hundreds of thousands of state employees to the private sector in 2011 as the government prunes more than 500,000 workers from its payroll.
The official trade union federation said on Monday that eventually more than a million jobs would be cut.
EDITOR’S CHOICE
Cuba’s economy at a crossroads - Sep-12.Lex: Cuba - Sep-10.Opinion: Time to press on with our plan in Havana - Aug-31.Oil exploration in Cuba expected to go ahead - Aug-29.Castro returns with apocalyptic warnings - Aug-08.Fidel Castro in rare address to Cuban parliament - Aug-08..“Job options will be increased and broadened with new forms of non-state employment, among them leasing land, co-operatives and self-employment absorbing hundreds of thousands of workers in the coming years,” the union statement said.
According to a document circulating within the higher ranks of the Communist party in preparation for the “reorganisation of the labour force” announced on Monday, 465,000 non-state jobs would be created in 2011, of which some 250,000 would fall under the category of new licences for self-employment.
Self-employment, begun in the 1990s, covers everything from family-run restaurants to car repair shops, construction and artisans. Non-state jobs included workers hired by the self-employed, ex-state employees such as taxi drivers who would move to a leasing arrangement, and employees of small state businesses that went over to a co-operative form of administration, said sources who have seen the plan.
The plan represents the most important reform undertaken by President Raúl Castro since he took over from his brother Fidel in early 2008, and the biggest shift to private enterprise since all 58,000 small businesses were nationalised in 1968.
Raúl Castro has fostered discussion in the media and grassroots meetings on the problems afflicting the socialist economy, but he has made mostly minor changes up till now. The exception has been agriculture, where Mr Castro has leased state lands to 100,000 farmers and loosened the state straitjacket on sale of farm inputs and produce.
The government reported more than 85 per cent of the Cuban labour force, or about 5m people, worked for the state at the close of 2009. There were 591,000 workers in the private sector, with most of those being farmers and 143,000 self-employed.
The massive layoff of 10 per cent of the state labour force is scheduled to begin in October and stretch through March. New licences for self-employment would be issued beginning in October , the sources said. Geographical limitations on self-employment and prohibitions on obtaining bank credits, doing business with state entities or hiring labour outside the family, would be eliminated.
Better accounting would be demanded of businesses, and the way they were taxed would be changed. As well as taxes on income, the self-employed would pay a sales tax and 25 per cent social security tax for themselves and each employee, the sources said, while co-operatives would pay a tax on profits and social security.
The state expected tax revenue from the self-employed to jump from 250m pesos ($9.4m) this year to about a billion pesos in 2011, the sources said.
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